On Tuesday, Boligprodutenenes Forening’s housing statistics for 2022 came out.
It showed the lowest sales figures since the financial crisis.
– Many projects have been put on hold or cancelled, and unfortunately we are seeing resignations and redundancies in the industry, says managing director of the Boligproduserenes Association, Lars Jacob Hiim.
He is concerned about the housing supply throughout the country.
In 2022, a total of 19,371 new housing units were sold. This is a decrease of 26 percent from the previous year.
It is the last quarter in particular that has had the greatest decline in new home sales. In the last three months, sales had fallen by 41 per cent.
In December, it had fallen by 50 percent, compared to December 2021.
The start of new homes was at the same level in the first half of 2022 as it was in the first half of 2021. After this, it has fallen.
Chief economist at the Prognosesenteret, Nejra Macic, says that the low sales figures will lead to lower starts on new homes. This will again lead to a fall in the number of completed new homes in two years’ time.
– Lower initiations lead to a lower supply of housing in two years’ time. This will push prices up again, as there will be fewer new homes on the market, says Macic.
The economic uncertainty in 2022 with war in Europe, rising interest rates and unusually high inflation has led to many home buyers shifting their demand from the new home to the second-hand home market.
– The demand for new homes has fallen to the given prices. Had the prices of new homes been reduced, many more would have been sold. But this is not possible with the high construction costs, without the developers making a loss, says Macic.
She also points out that sales of new homes have been falling for a long time, but that it is only now that starts are also falling.
– No “quick fix”
Macic points out that there are many factors that must come into play for the situation to turn around.
– There is probably no simple solution. What has driven construction costs to these high levels is strong price growth for building materials internationally in 2021 and the first half of 2022. Much of that is beyond our control in Norway, she says.
Half of the construction costs are labor costs, which are expected to grow further.
But there are several pieces that need to fall into place.
– People must regain interest in new homes. They will get this if there is a safer financial situation, which we saw after the financial crisis, says Macic.
– Another factor that needs to be that there are no more interest rate increases.
– There is probably no “quick fix” to the challenge, but there are several indications that sales will pick up in the second half of the year. And then the start-up will increase again in 2024, but it will only affect the completions two years after that, she says
In the report, Boligproduktorenes Forening has three requirements to ensure what they believe is the necessary housing supply.
The association asks that Norges Bank does not raise the interest rate any further. They want the interest rate hikes that have already been initiated to be given time to work.
Furthermore, they request that the municipalities must simplify the proceedings in planning and building matters. They also ask that the house bank must be used actively and that the lending limits must be increased.